Cross Pacific Partners: Japan's Startups, US Dollars

REDWOOD CITY, Calif.—Life is quite regimented across the Pacific—Japanese people tend to follow a designated path that leads from primary school to secondary school, to university and a good job that will sustain you through your working years, then to marriage and children. This traditional culture puts heavy emphasis on success and is generally risk-adverse, a direct opposition to risk-taking startup culture in America.

“Failure has very, very serious consequences in Japan. Japanese life has changed slightly [over the past 30 years] but most people still work for one company their whole life,” said TT Chu, co-founder of image analysis software startup Brand Pit. “There is basically no secondary job market in Japan. If you go and quit your job and start up your own company and fail, you can’t really get back into the workforce.”

Yet the Japanese cities of Tokyo and Osaka have small, tight-knit startup scenes that heavily focuses on the Internet of Things (IoT) due to the large number of hardware engineers. Brand Pit Co-Founder May Yamaura said most of the people in the startup scene are over age 30 because innovative Japanese corporations prefer hiring young entrepreneurs.

“Even though big companies try to be innovative, they have almost no way to be so because of the company structure,” Yamaura told EE Times. “It makes it hard for startups to try to cooperate with big companies. That’s why our government is trying to push startups.”

Brand Pit received funding from the government-backed New Energy and Industrial Technology Development Organization (NEDO), which provides seed stage investment and R&D funding for Japanese startups. The two groups were among the Japanese entrepreneurs and investors at a pitch night (March 10) hosted by Silicon Valley Forum, which focused on building a bridge between Japanese innovation and the “Silicon Valley way of business.”

“I think Japan as a country, as a government is very poor on the marketing side. People are thinking about China and maybe Brazil for innovation and Japan is somewhat always ignored,” said Gen Isayama, co-founder and CEO of World Innovation Lab. “Once Japan increases awareness, people will quickly realize how stable the society is and how big the country could be. If you can work through the bureaucracy and be patient working with corporations, the results could be great.”

In addition to cultural barriers that make business challenging, Japanese startups face a lack of angel investors and venture funds, said Tirias Research Principal Analyst Kevin Krewell.

“That said, there's a lot of great technology in Japan that could be applied more innovatively and more globally. Successful entrepreneurs from Japan should be thinking about markets outside of Japan,” Krewell told EE Times.